Medical Office Feasibility Study in Nevada

Nevada physicians borrow big, often through 504

Nevada's medical office lending stands out on loan size, and the median is the gauge on which this cell passes our margin against the Nevada all-asset book and physician offices nationally. The Nevada median was $611,000, which is 1.79x the national median for the class, and Nevada loans between the quartiles ran from $200,000 to $1.2 million. The 177 Nevada approvals from FY2017 to FY2026 total $158.5 million. Physician offices are the 3 of 39 class in Nevada and carry a location quotient of 2.16x against their national share of SBA lending, and Nevada sits 10 of 53 in the national ranking for physician office loans.

The size has a clear source: real estate. SBA 504 carries 74 Nevada approvals against 103 under 7(a), a heavy 504 share, so many Nevada physicians are buying or building their own offices. The Mortgage Capital Development Corporation holds 32 Nevada 504 loans worth $34.5 million, Nevada State Development Corporation 29 worth $38.8 million, and California Statewide Certified Development Corporation 11. On 7(a), Wells Fargo Bank National Association and Zions Bancorporation, National Association hold 14 each, U.S. Bank, National Association 11 and Western Alliance Bank 5. Nevada's franchise share in the class is 0.00%.

Nevada floors: cancellations to plan for

Cancellation is the Nevada risk. The floor for FY2017 to FY2024 approvals is 14.5%, and the ceiling 15.1%, so a meaningful share of committed medical office loans in Nevada never fund, often because construction cost, the appraisal or a partner buy-in changes after approval. Charge-offs are modest: of 75 Nevada loans disbursed in the FY2017 to FY2021 period, 2.7% have been charged off so far and 1.3% within five years, both floors.

What a Nevada medical office study must test

Clark County holds 140 of the approvals and Washoe 26, with Carson City at 5, so almost all comparison data comes from those two counties. A feasibility study must test the physician's patient base and referral sources, the payer mix, and the supply of competing practices and medical space nearby. Where a Nevada practice is building under 504, contractor bids should set the budget, medical build-out included. The coverage ratio should hold on collections the practice can document at loans that reach $1.2 million at the upper quartile. The appraisal must value the building as medical office real estate, including whether it could be leased to another practice, separate from the physician's business.